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Juneau Empire: Discretionary voting rigs the game for Native corporations

Imagine if the Alaska Republican and Democratic parties were allowed to run elections. They could stamp one-sided endorsements on the ballots and spread votes among their preferred candidates so each had just enough to win. You could forget about any independent candidate ever winning.

You probably wouldn’t consider the process to be very democratic - or fair - for anyone but the ruling party.

Unfortunately, we don’t have to imagine this scenario. It is the reality of Sealaska elections.

It’s no surprise that the regional Native corporation’s annual election saw every incumbent win. As in Las Vegas, the odds are stacked in the house’s (or board’s) favor. The tool here isn’t a weighted roulette wheel. It’s something called discretionary voting.

Each time a shareholder sends in his or her ballot by mail, he or she is allowed to assign votes (votes are distributed per number of Sealaska shares) to different candidates or cast what’s called a discretionary ballot. Under that ballot, the board gets to decide where the votes go.

Sealaska officials say discretionary voting is a common practice among Native corporations. That doesn’t mean it’s a good practice, or a fair one, for the shareholders who have entrusted Sealaska’s financial resources to a select few. Discretionary voting turns an incumbent’s natural advantage into a monolithic defense against any challenger. It isn’t good democratic practice.

Under this board of directors, Sealaska has posted massive financial losses. Any public company with such poor financial performance would have had a new board years ago. Not Sealaska.

Sealaska has seen a $50 million turnaround from last year, and in his first year at the helm we’ve been impressed with President and CEO Anthony Mallott’s vision and honesty when it comes to Sealaska’s finances. He knows the corporation has hit some hard times, and during public speaking engagements and in newsletters to shareholders he has been humble, even apologetic in some instances, for the hole Sealaska has been filling.

It was Mallott who decided to nix employee bonuses amid operational losses. We applaud him for that, but question why the board didn’t demand an end to these bonuses long ago. We also can’t understand why operational losses, which topped $70 million in 2014, weren’t addressed sooner.

In April, Central Council of Tlingit and Haida Indian Tribes of Alaska members voted on a resolution that advocates improved voting rights in Sealaska’s elections. We feel other Native organizations and groups should jump on board with this idea.

Discretionary voting discourages shareholders from becoming informed about candidates and the voting process, and because voters are paid to send in their ballots, the result is corporate sclerosis. Unless voters demand change, they will not receive it.

If those currently sitting on the board are in fact the best candidates, ending discretionary voting will make no difference. Considering Sealaska has posted operational losses of about $150 million since 2010, we doubt that is the case.

People get the government they demand. The Central Council is speaking up for many who demand change, but they can’t enact that change alone.

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July 5, 2015

Juneau Empire: Walker’s tax credit cut a fair move

Is Alaska’s oil tax credit system broken? That’s what Gov. Bill Walker said Wednesday after cutting $200 million from $700 million budgeted by lawmakers to aid companies exploring and developing new wells. Considering these payments to oil producers could soon top $1 billion, it was a necessary line item veto until a larger conversation can happen.

Last year Alaska paid out more in tax credits than it collected in oil production taxes from producers. Until Walker pulled out his veto pen, Alaska was anticipating to spend $400 million more this year on tax credits than it collected.

Under different circumstances, say, $110 per barrel oil, this conversation wouldn’t be necessary. When prices are high, there’s more than enough money to go around. But these are not those times.

Very few in the Alaska Senate’s and House’s Republican-led Majority were willing to tackle the tax credit dilemma despite cries by the Minority to do just that. Majority leadership, among other reasons, has said Alaska needs to send a message of stability to the oil industry by keeping the credits intact. It’s hard to convince anyone of stability when you’re staring down a $4 billion hole this year and next.

Juggling what Alaska spends on tax credits compared to the revenue it brings in through oil is a necessity considering the current fiscal crisis. Every state department has taken its licks, some hard-working Alaskans have lost their jobs, so giving immunity to the oil industry makes little sense when everyone else is being asked to do more with less. Alaska will honor its tax credit commitments, but a cutoff point was needed. Otherwise, prospective oil producers could have recovered more than the $700 million originally budgeted.

Every penny matters, or in this case 20 billion pennies. It’s a fair compromise considering the Minority wanted to do away with the credits entirely and the Majority wasn’t willing to cut a cent.

Smaller companies will still have tax credit payouts available this year, and likely next as well. If the oil is there, and these companies have a means to retrieve it, they will. A $200 million reduction isn’t enough to force businesses to pack up and go entirely. What it will do is temper how much the state invests in these companies before they ever put a drop of oil into the Trans-Alaska Pipeline System.

Slashing payouts to the oil industry is the necessary move if Alaska is ever to balance its budget amid low oil prices. No entity, whether private business or governmental, should be getting a free ride, let alone taking more from the state than it is putting in. This isn’t about picking on oil producers; rather it’s about sharing a burden that every resident and business must bear until Alaska’s budget is once again balanced.